Markets wipe out all gains to end lower on profit booking

Indian markets wiped out all of their early gains and ended lower on Wednesday amid profit booking, with Sensex and Nifty closing the session below their psychological levels of 38,200 and 11,450, respectively. After a firm start of the day, key indices remained positive for the most part of the session with Vice President of India, M. Venkaiah Naidu’s statement that tax reforms were slowly increasing India’s tax base and shifting the social norms from one where it was alright to avoid taxes to one where the majority is willing to pay. Traders took support with a report that the RBI has received a good response to its dollar swap window on March 26, establishing the instrument as a credible liquidity tool and paving the way for more such auctions in the coming months. Banks offered $16.31 billion for the proposed swaps of up to $5 billion. The RBI accepted $5.02 billion at a cut-off premium of Rs 7.76 for three-year dollars - close to the rate at which the market was trading at. Some comfort also came with a private report indicating that although 2018 brought some cyclical challenges, India maintains top ranking in overall consumer sentiment, while Brazil has overtaken China to come second.

However, in the last hours of the trade, the markets gave up their gains to settle in negative territory, amid weak cues from global markets. Domestic sentiments got hit after former RBI Governor Raghuram Rajan expressed doubts over Indian economy growing at 7% when not enough jobs were being created. The market participants overlooked Prime Minister Narendra Modi’s announcement that India has emerged as a Space Power today; till now only US, Russia and China have achieved this; now India is the 4th country to achieve this feat. He added that, ‘we have enough satellites that are contributing in various segments such as agriculture, disaster management, communication, weather, navigation etc.’ Moreover, India has successfully targeted a live satellite, anti-satellite weapon A-SAT, on a low Earth orbit. Mission Shakti took three minutes to complete. The PM added ‘our aim is to maintain peace over war mongering.’

On the global front, European markets were trading in red, even though France's consumer confidence strengthened for a third consecutive month in March to its highest level in seven months, led by modest improvement in expectations on personal finances and savings, despite rising fears of unemployment. The survey data from INSEE showed that the consumer confidence index rose to 96 from 95 in February. The score was in line with street expectations. Asian markets ended mostly in red, as China reported a drop in industrial profits in the January-February period, raising speculation the government might announce fresh measures to prop up growth. Besides, investors looked ahead to another round of US-China trade talks resuming in Beijing on Thursday. Uncertainty remains over how the world's two largest economies will address key issues like intellectual property and removal of most tariffs.

Back home, realty sector stocks mostly ended higher, on reports that housing sales are expected to rise in 2019, as the realty market is on a recovery path after absorbing the impact of policy reforms like RERA, GST and note ban. The report further said that 200 million square feet of space will be added in 2019 across all segments including housing, office, retail and logistics. Selected stocks of metal sector also gained, aided by to global steel body World Steel Association’s report that the country's crude steel output in February grew 2.3 per cent to 8.74 million tonne (MT) from 8.54 MT in the year-ago month. Further, power sector stocks remained in focus with the secretary of ministry of renewable energy’s statement that India will launch $5 billion of transmission-line tenders in phases, beginning in June, to route a targeted 175 gigawatts (GW) of power from renewable sources into the country's grid by 2022.

Finally, the BSE Sensex fell 100.53 points or 0.26% to 38,132.88, while the CNX Nifty was down by 38.20 points or 0.33% to 11,445.05.

The BSE Sensex touched a high and a low of 38,475.93 and 38,001.34, respectively and there were 10 stocks advancing against 21 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index gained 0.59%, while Small cap index was up by 0.64%.

The few gaining sectoral indices on the BSE were Bankex up by 0.70%, Consumer Durables up by 0.51%, Basic Materials up by 0.29% and Metal up by 0.05%, while Utilities down by 1.08%, Energy down by 1.01%, Power down by 0.95%, Auto down by 0.77% and Oil & Gas down by 0.72% were the top losing indices on BSE.

The top gainers on the Sensex were Yes Bank up by 5.62%, Indusind Bank up by 5.27%, SBI up by 1.57%, Bajaj Auto up by 1.18% and Vedanta up by 1.12%. On the flip side, NTPC down by 2.25%, Tata Motors down by 1.85%, Bharti Airtel down by 1.49%, Power Grid down by 1.36% and HDFC down by 1.30% were the top losers.

Meanwhile, The Election Commission (EC) is likely to approve a Rural Development Ministry request to revise the wages under Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) from April 1. The development could benefit crores of beneficiaries across India. The new wage rates for the MGNREGA are linked with the Consumer Price Index for agricultural labourers (CPI-AL).

The ministry had approached the EC for approval as the model code is in force. The government would be specifically asked against publicising the hike, if the request is approved. Different states have different wage rates so the increase in wages will also be different. The wages may remain flat in some states, while the increase could be up to 5 percent over and above the current wage in others. In interim budget, the government had proposed to allocate Rs 60,000 crore for rural employment scheme under the MGNREGA for the year 2019-20. The amount allocated for 2019-20 is 11 percent higher compared to Rs 55,000 crore for 2018-19. The revised estimate for the year 2018-19 was Rs 61,084.09 crore.

MGNREGA, a rural job guarantee scheme introduced in 2005, now covers all the rural districts of the country. The main objective of the scheme involves providing up to 100 days of unskilled manual work in a financial year to every household in rural areas as per demand, resulting in creation of productive assets.

The CNX Nifty traded in a range of 11,546.20 and 11,413.00. There were 16 stocks advancing against 34 stocks declining on the index.

The top gainers on Nifty were Yes Bank up by 5.87%, Indusind Bank up by 5.68%, Indiabulls Housing Finance up by 2.78%, JSW Steel up by 1.71% and SBI up by 1.48%. On the flip side, HPCL down by 2.82%, NTPC down by 2.70%, Tata Motors down by 1.94%, Bharti Airtel down by 1.89% and Eicher Motors down by 1.67% were the top losers.

European markets were trading in red; UK’s FTSE 100 lost 10.81 points or 0.15% to 7,185.48; France’s CAC shed 17.44 points or 0.33% to 5,289.94 and Germany’s DAX was down by 39.34 points or 0.34% to 11,380.14.

Asian markets ended mostly lower on Wednesday as some disappointing US data added to investor worries about global growth. Brexit-related developments and the US-China trade talks also remained on investors' radar. Japanese shares ended lower as many stocks began trading ex-dividend. Though, Chinese shares ended higher as a drop in industrial profits in the January-February period raised speculation the government might announce fresh measures to prop up growth.